NEW YORK (AP) 鈥� It’s been a confusing time for people with student loans. Collections restarted, then were put on hold. At the same time, borrowers had to stay on top of changes to key forgiveness plans.
President Donald Trump鈥檚 鈥淏ig Beautiful Bill鈥� introduced new borrowing limits for graduates and raised challenges to the Public Service Loan Forgiveness program. While several changes for will take effect this summer, other key questions remain unresolved.
More than 5 million Americans were in default on their federal student loans as of September, according to the Education Department. Millions are behind on loan payments and at risk of default this year.
Borrowers “genuinely struggle to afford their loans and then to hear that the administration is making it more expensive and taking away some of the tools and resources that help folks afford their loans is really, it鈥檚 panic-inducing,鈥� said Winston Berkman-Breen, legal director at Protect Borrowers.
Last month, the Education Department announced that it would delay involuntary collections for student loan borrowers in default until the department finalizes its new loan repayment plans. The date for this is still unclear.
If you鈥檙e a student loan borrower, here are some key things to know:
If you were enrolled in the SAVE plan
The was a repayment plan with some of the most lenient terms ever. Soon after its launch it was challenged in court, leaving millions of student loan borrowers in limbo. On Monday, the U.S. Court of Appeals for the 8th Circuit ordered to officially end the SAVE plan. What is next for borrowers who were enrolled in this repayment plan is yet to be determined.
鈥淪even and a half million borrowers who are currently enrolled in SAVE need to be moved to another plan,鈥� Berkman-Breen said.
The Education Department is expected to develop a plan for borrowers to transition from the SAVE plan, yet borrowers should be proactive about enrolling in other repayment plans, said Kate Wood, a lending expert at NerdWallet.
If you are looking to enroll in an income-driven repayment plan
Borrowers can apply for the following : the Income-Based Repayment Plan, the Pay as You Earn plan, and the Income-Contingent Repayment plan.
鈥淭hey all have similar criteria, and they function similarly. Your payment is set as a percentage of your income, not how much you owe, so it鈥檚 usually a lower payment,鈥� Berkman-Breen said.
The payment amount under income-driven plans is a percentage of your discretionary income, and the percentage varies depending on the plan. Since many people are looking to switch plans, some applications to income-driven repayment plans might take longer to process, said Jill Desjean, director of policy analysis at the National Association of Student Financial Aid Administrators.
You can find out which repayment plan might work best for you by logging on to the Education Department鈥檚 .
If you鈥檙e working toward your Public Service Loan Forgiveness
There are no changes to the yet. Last year, the Trump administration announced plans to change the eligibility requirements for participating nonprofits.
The policy seeks to disqualify nonprofit workers if their work is deemed to have 鈥渟ubstantial illegal purpose.鈥� The Trump administration said it鈥檚 necessary to block taxpayer money from lawbreakers, while critics say it turns the program into a tool of political retribution.
The proposal says includes the trafficking or 鈥渃hemical castration鈥� of children, illegal immigration, and supporting foreign terrorist organizations. This move could cut off some teachers, doctors, and other public workers from federal loan cancellation.
鈥淭his is something that obviously is very stressful, very nerve-wracking for a lot of people, but given that we don鈥檛 know exactly how this is going to be enforced, how these terms are going to be defined, it鈥檚 not really something that you can try to plan ahead for now,鈥� Wood said.
While this policy is currently being challenged by 20 Democrat-led states, it鈥檚 expected to take effect in July. In the meantime, Wood recommends that borrowers enrolled in the PSLF program continue making payments.
If your student loans are in default
on federal student loans will remain on hold. The Trump administration announced earlier this month that it is delaying plans to withhold pay from student loan borrowers who default on their payments.
Federal student loan borrowers can have their and their federal tax refunds withheld if they default on their loans. Borrowers are considered in default when they are at least 270 days behind on payments.
If your student loans are in default, you can contact your loan holder to apply for a loan rehabilitation program.
鈥淭hey essentially come up with a payment plan where you鈥檙e making a reduced payment,” said Wood. 鈥淎fter five successful payments on that rehabilitation plan, wage garnishment will cease.鈥�
If you鈥檙e planning to attend graduate school
Trump鈥檚 鈥� 鈥� has changed the amount graduate students can borrow from federal student loans. Graduate students could previously borrow loans up to the cost of their degree; the new rules cap the amount depending on whether the degree is considered a graduate or a professional program.
Wood said that if you’re starting a new program and taking out a loan after July 1, you will be subject to the new loan limits.
Under the new plan, students in professional programs would be able to borrow up to $50,000 per year and up to $200,000 in total. Other graduate students, such as those pursuing nursing and physical therapy, would be limited to $20,500 a year and up to $100,000 total.
The Education Department is defining the following fields as professional programs: pharmacy, dentistry, veterinary medicine, chiropractic, law, medicine, optometry, osteopathic medicine, podiatry and theology.
If you want to consolidate your loan
The online application for loan consolidation is available at . If you have multiple federal student loans, you can combine them into a single loan with a fixed interest rate and a single monthly payment.
The consolidation process typically takes around 60 days to complete. You can only consolidate your loans once.
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